As part of an application for a $2 billion federal loan to help pay for a replacement Tappan Zee Bridge that would double the width of the current bridge, the Cuomo administration has put forward a new and much-higher estimate of the project’s cost: $6 billion. That’s $800 million higher than previous press reports had stated, and $1.4 billion more than the state put forward in its draft environmental impact statement. The loan application also suggests that the administration will use toll revenues to repay the feds, meaning potentially huge toll hikes for Tappan Zee drivers without providing any effective transit option as an alternative.
The $2 billion loan application, first reported by Bloomberg News and provided as a PDF by Gannett, is for funding from the federal TIFIA program. A TIFIA loan must cover no more than 33 percent of the the total project cost. A $2 billion loan application therefore requires a total project cost of $6 billion or more.
The Cuomo administration’s application states: “TIFIA loan assistance of $2.0 billion is requested, representing up to one-third of the assumed total project cost of $6.0 billion in year-of-expenditure dollars.”
Nancy Singer, a spokesperson for the Federal Highway Administration, confirmed that a $2 billion loan could only fund a project that cost $6 billion or more, though she wouldn’t speak to the particulars of the Tappan Zee Bridge. Neither the New York State DOT nor the governor’s office has responded to Streetsblog inquiries about the loan application.
Early press reports put the cost of the bridge at $5.2 billion, while the DEIS had the cost at $4.64 billion. The Cuomo administration is telling Washington that the Tappan Zee Bridge could cost between $800 million to $1.4 billion more than it’s disclosing to the public in its environmental review.
It is possible, as Klopott notes, that the new federal transportation bill currently debated in Congress would increase the maximum TIFIA loans can cover to 49 percent of the total project cost. If that provision passes — and with the House of Representatives pursuing an extremely radical bill, signs from Washington don’t currently point to a speedy resolution there — it would be possible for a $2 billion loan to be granted for a bridge that costs less than $6 billion. The state’s application, however, was made under the existing law.
Given the Tappan Zee’s special status as one of only 14 infrastructure projects chosen for expedited review by the Obama administration, it seems relatively likely that it would receive a TIFIA loan if it meets the program’s basic criteria.
In this case, Cuomo plans to use toll revenues from the Tappan Zee to pay back this $2 billion, with possible fare hikes on the rest of the Thruway system providing a financial backstop.
“The Project is expected to be funded from Bridge revenues but the creditworthiness of the Project will benefit from the system-wide pledge of Authority revenues,” states the loan application. Noting that the Thruway Authority has the power to raise tolls on its own, the application also promises that those tolls could be raised to fund the new Tappan Zee Bridge: “[T]he Authority’s toll rates remain among the lowest of its peer agencies, leaving significant capacity for future adjustments to fund the Project.”
It is not clear, however, whether toll hikes would be used to fund the entire bridge project, or just to pay back this $2 billion loan. An analysis by Charles Komanoff found that tolls would likely have to be set at $16 or higher to pay for a $5.2 billion bridge. The math would work out to be roughly the same with a $6 billion bridge and cheaper borrowing.
If the state isn’t willing to shoulder $16 tolls, though, that leaves the same funding gap as before. So far, the administration has only publicly discussed financing plans, like using union pensions to pay for the bridge, but not the funding streams that would pay back lenders.
Even as the state applies for federal funding, it remains unclear how much the bridge will really cost and who’s ultimately going to pay for it. Nor will anyone explain why the projected costs for bus rapid transit quintupled under the Cuomo administration. The state’s public outreach offices have been shuttered and stakeholder meetings cancelled. The state continues to show a total lack of transparency around its plans for the Tappan Zee Bridge.